Any possible changes will be closely watched as Wal-Mart’s
/quotes/zigman/245476/delayed/quotes/nls/wmtWMT fourth-quarter same-store sales at its namesake U.S. unit, the bulk of its business and a key investor focus, dropped for a fourth straight quarter. Wal-Mart blamed a shorter holiday season, winter storms that led to closings of over 200 stores companywide and a cut in food stamp benefits that led to a decline even in its traditionally strong grocery business. Wal-Mart shares dropped almost 2% in early trading, biggest Dow decliner.

The company said continued winter storms have led to a sales decline so far this month and that the global retail landscape remains challenging, hurt by low inflation, relatively high unemployment and “fragile” consumer confidence.

The retailer also expects increased health-care costs because it’s seen increased enrollment from employees that see its plans as better options than what’s available in the market,” Walmart U.S. chief Bill Simon told reporters on a conference call.

“Walmart has a long history of embracing change,” McMillon said on a separate, pre-recorded call, on which he promised to improve Wal-Mart’s “customer relevance.”

“This year, we’ll certainly make some changes to improve our business. Customers’ shopping habits are changing more rapidly than ever before. We must be more nimble and flexible as we operate our businesses to adapt to these changes,” McMillon said.

Some analysts said Mike Duke, McMillon’s predecessor, tended to place heavier emphasis on productivity and expense controls.

Wal-Mart plans to double openings of its Neighborhood Markets and Walmart Express, to 270 to 300 in the U.S. this year. That’s because as Walmart U.S. comparable sales dipped as a whole, while Neighborhood Markets saw 5% growth. The smaller-format Express on a comparable basis also saw gains in the mid-single digit to double-digit percentage. While the company’s supercenter traffic has been hurt by consumers’ not making the mid-week fill-in trips, those smaller stores have seen increased fill-in purchases, Simon said.

Wal-Mart “has mostly ceded the small-basket shopping trip–the fastest-growing trip mission–to other competitors, and is only belatedly making attempts to capture this market,” said Customer Growth Partners’ Craig Johnson.

Simon, in response to a question from MarketWatch, said he doesn’t see acquisitions as an option to expand growth in the area as Wal-Mart plans to outfit its locations with gas stations, and fresh and frozen food. It had 346 Neighborhood Markets and 20 Express stores at year end. Credit Suisse analyst Michael Exstein on Wednesday suggested the company should buy Family Dollar
/quotes/zigman/226252/delayed/quotes/nls/fdoFDO to expand its smaller-format growth.

“Our stores from the location and physical footprint perspective aren’t exactly what we see in those dollar chains,” Simon told MarketWatch. “Express does four times what a typical dollar store does while Neighborhood Market does six to seven times. It’s hard to find something that works with (Wal-Mart’s) format.”

Bloomberg

Doug McMillon

McMillon, meanwhile, also promised continued investments on the online and mobile front and leveraging Wal-Mart’s physical stores to generate growth. Online sales last year rose 30% to more than $10 billion, though it still pales against the retailer’s total sales of $473 billion. One area Walmart may be eying more closely: online grocery delivery. The company said its grocery delivery test expansion to Denver in October has gotten a great response.

Story Conversation

About Behind the Storefront

Behind the Storefront is a blog about all things retail. It’s aimed at investors, shoppers and anyone else with a passion for learning about what drives consumer behavior. Hosted by Andria Cheng, Behind the Storefront will cover the business, brands and shopping behavior that’s behind some of the biggest companies, and largest employers, in the world. You can reach Andria at Acheng@marketwatch.com.